What if my income changes after I receive an insurance subsidy?

Q. If I’m unemployed at the beginning of the year and sign up for health insurance through my state’s health insurance exchange, I’d probably get a subsidy because my income would be low. But what happens if I get a job later in the year and start earning a good salary? Will I have to pay the money back?

A. You may have to repay some of the money, but the amount you’d owe would likely be capped. Every individual’s circumstances are different, but here’s how it might work in a typical situation.

When you apply for health insurance on your state’s marketplace, you’ll be asked about your income. If you’re collecting a typical unemployment check of about $300 a week and you live in the District of Columbia or one of the 25 states expanding Medicaid to adults with incomes up to 138 percent of the federal poverty level ($15,856 for an individual in 2013), you’ll probably qualify for coverage under that program and won’t have to buy a plan on the exchange.

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If you live in a state that’s not expanding Medicaid, however, you can shop for subsidized coverage on your state’s marketplace. Premium tax credits are available to individuals with incomes between 100 and 400 percent of the federal poverty level ($11,490 to $45,960 for an individual in 2013).

If you’re collecting $300 a week in unemployment benefits, you’d probably qualify for a premium credit. If you choose to receive the credit up front rather than at tax time next year, your insurance premium would be reduced by the amount of your tax credit, and the government would send that amount to the insurer.

Let’s say you land a job in July with a $60,000 annual salary, but it doesn’t offer health insurance. At that point, you’d need to inform the marketplace about your change in circumstance.

At your new salary, you’d no longer qualify for a premium tax credit, and you’d have to pay the full premium. At tax time, the government will reconcile the amount that you received in tax credits against your income for the year, in our example, roughly $38,000, including six months of salary and six months of unemployment insurance.

If the amount you received in tax credits is higher than it should have been based on your annual income, you’ll have to pay back the difference. But under the law your liability is limited if your income is less than 400 percent of the federal poverty level. Someone like you with income between 300 and 400 percent of poverty ($34,470 to $45,960 in 2013) would be liable to repay no more than $1,250.